This post’s subject is money: supposedly it makes the world go round, after all.
The Red Hill Publishing business model is a little different to a that of a traditional publishing house, so I thought it would be a good idea to explain just how different.
Under a traditional deal the publisher takes the financial risk while also adding value to a manuscript (i.e. providing editorial, proofing, typesetting and design expertise), so they retain the majority of the profit (or wears the loss). Red Hill, on the other hand, adds exactly the same value in terms of publishing expertise but defers the risk to the author, who in turn retains the majority of the profit (or wears any losses).
The difference between the business models starts to get interesting when we look at who earns what, and when.
In a traditional deal an author receives an advance, let’s say $10,000, and earns a royalty per book sold, let’s say $3. So the publisher needs to sell 3,333 books before the author sees a single $3 royalty payment.
Under the Red Hill model the same author would pay all costs associated with producing the title, let’s say $20,000, and retain the majority of revenue from the sales, let’s say $26.25 (on $30 RRP), assuming they sell directly to their audience rather than entering into a third-party distribution agreement. (Red Hill receives 12.5% on all books sold after the author recoups Red Hill costs.) Even if the author sold only 1,000 copies of their book, they would generate revenues of $26,250, representing a small profit for them.
But what if, over time, the author sold 3,333 copies of their book? Difficult for sure, but certainly not impossible. Author revenues would be $87,500: less original production costs ($20,000) and additional print costs ($6,066 at $2.60 per book for 2,333 copies) the author net profit would reach $61,434. On those same sales figures, under a traditional deal the author would not have yet received a royalty payment.
But this isn’t really about saying our model is better than any other. After all, Red Hill’s own co-founder, Sally Collings continues to be published by HarperCollins and benefits greatly from that relationship. What this is about — indeed what Red Hill is about in part — is helping authors make better-informed decisions. As Christopher Marlow suggested, “…there is no sin but ignorance”.
No doubt most authors will continue to pursue a traditional publishing deal and we unreservedly wish them well. But there will always be those authors who are prepared and able to back their vision, who understand their market and their audience, and have the means to reach them directly. These are people for whom Red Hill should become home – there’s more money in it!
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